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Having Problems With a Key Employee? Remember: No One Is Irreplaceable. Don't be held hostage by a self-made VIP who's wreaking havoc at your company.

By Doug and Polly White Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.


It is appropriate for small business owners to hand off various tasks and responsibilities to others as their businesses grow. After all, you can't do everything. If you want your business to grow, you must be willing to let go of some of the tasks you handled personally when the business was smaller.

In most cases, this process works well. However, sometimes the person who has taken over critical duties becomes a disruption or problem with in the business. When this happens, the business owner may be reluctant to make a personnel change -- especially if he or she believes the business cannot function without this employee.

We have seen dozens of these situations. The business owner has a bookkeeper, operations manager or sales person who is the only employee who knows how to do a critical function. This key employee begins to perform poorly, either in his or her duties, or more often behaviorally.

Related: Five Problem Employees and What You Can Do About Them

The situation continues to worsen until the performance or behavior is unacceptable. However, the business owner is afraid to take action, fearing the employee will quit. The owner believes that his or her business cannot function without the key employee and the knowledge and skills he or she possess. The owner is in effect, held hostage.

Inaction only makes the situation worse. The business often loses other employees or customers due to the key employee's poor behavior. The owner feels powerless, fearing that removing the employee will cause his or her business to fail. However, regardless of the short-term pain -- no one is irreplaceable. The owner and business can get through this. For example, we worked with a company that lost its entire management team save one person in a tragic fire. Extraordinary effort was required, but the company survived and eventually thrived.

1. Realize that no one is irreplaceable.

In all our years of business experience, we have learned that no one is irreplaceable. Your business may suffer some short-term setbacks. It may cost a bit more, and you will have to expend time solving the problem, but you can get through it.

In fact, we have never had anyone say, "I should have waited a few weeks longer before letting him or her go." Instead, what we repeatedly hear is that the business owner wished that he or she had terminated the problem employee weeks, months or even years earlier. The termination often brings a collective sigh of relieve from everyone involved.

Related: 4 Answers You Need Before Firing Your Problem Employee

2. Find people to help you through the transition.

There are services that can supply you with a temporary chief financial officer, bookkeeper, operations expert or other key employees. These services generally cost more than your current employee did, but this is a short-term fix. You can almost always hire a person with great experience in the functional area you need, even if it is only a consultant working on a temporary basis. You may have to fill in yourself for a few weeks or months, but this can help you to feel more comfortable in an area that you had previously abdicated to others.

3. Make a clean break.

It can be very difficult for the problem employee to train his or her replacement. You may think that you can bring in someone to learn parts of the job, thus easing the disruption to your business when you terminate the current employee. However, in our experience, the entrenched employee most often will be unwilling or at least reluctant to help you take duties away from him or her. His or her complete control over the function has allowed the bad behavior without repercussions.

Make a clean break. Ripping off the bandage will mean some pain, but again, you will get through it.

4. Don't let this happen again.

Before it occurs, you can reduce the impact of this type of situation with two steps. First, document your processes. If you document processes, more people can step in to take over tasks in the short term. Second, cross train as much as possible. This spreads the company knowledge over more people. It takes a bit of preplanning and effort, but it is completely doable.

As the saying goes, absolute power corrupts absolutely. If you find yourself with a key employee who is causing severe issues in your company, follow the steps above to extricate your company and yourself from the situation. Don't be a hostage. You can get through the short-term pain and get your organization back on track.

Related: One Bad Apple Can Ruin the Barrel

Doug and Polly White

Entrepreneurs, Small Business Experts, Consultants, Speakers

Doug and Polly White are small business experts, speakers and consultants who work with entrepreneurs through Whitestone Partners. They are also co-authors of the book Let Go to GROW, which focuses on growing your business.

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